Daily Tax Update - May 16, 2008

PRESIDENT ISSUES VETO THREATS FOR FARM & WAR SUPPLEMENTAL BILLS:  The Administration has issued veto threats in its Statement of Administration Policy for both the farm reauthorization bill and the war supplemental bills. Both the House and Senate passed the farm bill with enough votes to override a Presidential veto.

• Regarding the farm bill, the Administration’s statement said, “Americans appreciate our farmers and ranchers and understand the uncertainties and risks that farming presents. However, they do not understand why their taxes should be used to provide payments to individuals with adjusted gross incomes of $500,000 and higher, some of the wealthiest people in America. We are also concerned about a lengthy list of extraneous provisions that are not related to farm programs and have no place in this legislation. For a year and a half, the Administration has been consistently clear that Congress needs to move forward with a good farm bill that the President can sign. They have failed to do so. This legislation lacks meaningful farm program reform and expands the size and scope of government. I have visited face to face with our President and he was direct and plain. The President will veto this bill.”
• The House war supplemental bill includes a provision to pay for the cost of veterans' education benefits with a 0.47 percent surtax on the modified adjusted gross income of individuals earning more than $500,000 annually and couples earning more than $1 million. The Administration opposes the surtax provision. The Administration’s statement said, “A tax increase would be harmful to jobs and economic growth, and the President has been clear that tax increases are unacceptable. If the bill presented to the President contains a tax increase, he will veto it.”

TAX BILL INTRODUCED MAY 15TH:
S.3025: A bill to amend the Internal Revenue Code of 1986 to allow a credit against tax for the purchase of a flexible fuel vehicle.
Sponsor: Sen Thune, John [SD] (introduced 5/15/2008)      Cosponsors (None)

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE:
As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

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